Friday, February 27, 2015

We used to study the rules created by the early Buddhist order in graduate school. We wanted to understand what people (in this case, monks) were really doing. Nobody sane makes up rules unless there's a behavior they want to curb. Where there's a rule, there's a behavior. You get general rules, like don't kill, but you also get really specific rules, like don't be a jerk when it comes to the rules about sex, and when people are pointing out you're being a jerk about the sex rule, don't deny you're being a jerk (that means you, Bob). This reminds me of Shane from Wal Mart.

When it comes to the store, I've been reluctant to slap down rules before behavior became a problem, so we tend to avoid posting a lot of rules. That said, there are three rules, etiquette really, that seem endemic to game stores. They are:

Don't Scare the Straights

By all means, let your freak flag fly. We are a safe place. However, try not to scare the straights. The muggles keep the doors open for most full range game stores, so you want to maintain a modest level of propriety. If I can hear you screaming about murdering the orc baby from the counter, it's too loud. If you're screaming about murdering the orc baby at the counter, which can happen, you need to work on your tone deafness.

Also remember we have four major categories of games in the store, and all but the alpha gamer think the other three categories, games they don't play, are a little weird. That's right, you're all weird to each other. I try not to laugh at this. Plus we have the moms and uninitiated who need to be eased into the hobby. Don't scare the straights.

It's All Good

When it comes to those other three categories of hobby games or even competing games, please don't denigrate them. By all means discuss the ins and outs, comparing and contrasting various systems, but reserve the value judgments.

The beauty of a game store is we have such a vast variety of games that appeal to so many people. Unless you're very old or incredibly stubborn, there's a good chance you may gravitate towards one of these games in the future, so I kindly suggest you don't slam the door closed. It makes it harder to open later. Putting down other peoples games is bad form.

This is a hard lesson for staff too. One of the easiest ways to sell a great game is to point to how it's better than another game. I have groups that regularly feel the staff doesn't like them because the staff member is fervent about a particular game system at the expense of the others. My constant criticism of Games Workshop in this blog is often taken as a dislike of the game and its customers. It's a fine game with fine customers, regardless of GW shenanigans. So by all means have opinions, because you're a gamer after all and we can't change the position of the stars, but respect the person whose getting satisfaction out of that other thing.

Own Your Odor

Perhaps you have a glandular condition. Perhaps you walk everywhere because you're saving the planet. Perhaps you just got off a 12-hour shift. It's all good, but if you stink, that's on you. Unfortunately, this stink is so common and so pervasive, it has become a trait of your sub culture. Shower my friends, or at least carry some deodorant to spare the rest of us. You stink.

Our mail carrier came in this week and asked if it always smelled so bad on Saturdays. This is a woman who walks half way into the store for ten seconds, turns around, and leaves, yet she was bombarded by stank from a group of guys about thirty feet away. That is some hefty stench.

Today our new "odor control dispenser" arrives. This is a device that will cost us $5 a month because our customers apparently don't bathe in their culture. So I can put a price on stank, it's $5 a month plus the hidden costs of driven away customers. Please help us in this area. If you have a friend who stinks, perhaps subtly suggest bathing, or maybe a gift of deodorant is in order.

It shall be known, thousands of years from now, that these were the problems in the early gaming subculture.

Wednesday, February 25, 2015

Lesser boat, or hinayana is a pejorative Sanskrit term in Buddhism, used to describe earlier traditions that lacked the sophistication of what you're doing now, sailing to enlightenment in your greater boat (mahayana). There's a lot more to it than that, but I wanted to use this lesser boat terminology in discussing small business.

As small business owners, we are distinctly different from entrepreneurs. Entrepreneurs swing for the fences, introducing innovative business concepts, funded by other peoples money and often created by the best talent available, rather than their own hands. Most will fail spectacularly, their boat going down with millions of dollars of capital. When Americans talk about small businesses, they mean entrepreneurs, the greater boat. If you follow business programming, this is where the action is, while small business gets mentioned usually because it's just so surprising the lesser boat still exists. They regularly do health checks to see if the leaks have finally claimed the small business armada.

The smoke and mirrors of Amazon and the Wall Street money behind it seem intent on crushing small business in an attempt to grab Internet market share. So it's no wonder they're perplexed at our continued survival.

But should they be surprised? Small business is true capitalism. If you're a capitalist, this is where it's at, at least at the micro level. There are no government subsidies, bail outs, tax tricks or cronyism in small business. I am not going to buy up assets with other peoples money and depreciate them over time to give the impression of profitability so my investors can pump money into my business. When I run out of money, I've failed.

When a small business does fail, it's considered healthy for the ecosystem, as opposed to big business, where everyone wrings their hands and looks for solutions and morals to the story. A dead small business is a sick bison feeding the hungry wolf in a nature parable, while big business failure requires solutions, restructuring and fixes. Small businesses are often started with credit cards, home equity, and meager savings. It is true banks only loan you money when you don't need it. But lest you think this is truly the small boat, small business is also surprisingly sophisticated.

Small business leverages cutting edge technology. Facebook is my bitch, allowing marketing power never experienced in human history. Point of sale systems are leap frogging in sophistication from one version to the next, with web integration, custom ordering, and bells and whistles the big retailers have had for years. I can't keep up with it, while it was pretty stagnant just five years ago. We use and experiment with modern management techniques. We employ just-in-time inventory models and inventory metrics for maximum efficiency. We study how to improve and how others are succeeding in fiddly, corner case areas where big business and entrepreneurs fear to tread. We do this while placing orders for toilet paper and instructing staff how to put boxes on shelves. Small business gets so little respect, that even the designation "small business" is appropriated. the SBA considers small business to have up to 500 employees. 500!

I started this business because I wanted a simpler life, something easier to understand. I expected my game story to be like Oleson's Mercantile from Little House on the Prairie. I actually envisioned that quant store when I thought about it. I saw myself counting nails at Oleson's. Let me tell you though, this business can be just as complex and sophisticated as any business out there. This ain't the prairie, my friend.

And that's where we get into perception. It is perceived, by those who know us, that we are in fact Mr. Olesons in our mercantiles. That our small boat, is a hobby of a business, a simple place where we play games all day, rather than a sophisticated small enterprise.

I don't want to sound defensive, because I know I will to the uninitiated, but we are not entry level. We are not a place for your first job or for high school kids to get their feet wet in business. The staff is educated, sophisticated, and well trained, with jobs easily as complex as any entry level college graduate corporate position. My staff will crush it when they move on to their professions. I am not exaggerating. I'm also not saying we're special. This is true with all small businesses like ours. It's really damn hard. There is no net or societal support, in fact often the opposite, as we are not represented by a lobby or effective trade group. Want a tax hike? Tell small business to bend over. Don't get me started on the county agriculture department harassment. There is also no luck.

We're not swinging for the fences, so we're not entrepreneurs, but neither are we playing store. We won't have a shot at riches and fame like those clever MBAs (nor will we burn millions in a bon fire), but we're no less professional in our endeavors. We are all in the same boat. I suppose if I could impart one bit of understanding to our friends, family, community and the rest of the business world, it would be this.

Monday, February 16, 2015

I made the decision recently to step away from the counter and hand over day to day operations to my staff. After ten years of being pulled in different directions, of building the business while running the business, I finally decided to give away part of that work. My staff is really good, in many ways, better at the job than me.

It's a hard decision to make, since customer interactions are the best part of the job. I'm pretty good at it too. Moving on from something you've mastered is difficult (yes, I said it), but I think it's also necessary. The trap is getting stuck, and I was feeling stuck. So what do I do?

Well, I still go to work at the store. Finding enough work to do is like any new job you step into. You know there are things that need doing. You know there are things that you're supposed to be doing, that you haven't figured out yet. Your day is about poking around, tying to find out what those things are. For me, it's about taking the "building a business" tasks and giving them my full attention. Marketing is a good example. Community outreach is something I've stated is an objective that others are working on (important, but not my thing). Purchasing, which is often rushed, now is more professional. Dealing with the smaller vendors and negotiating deals has been my thing of late. Oh, and there's still a decent chance I'll be managing a construction project. You get the idea.

There are pitfalls here. First, it's important I continue to show up. The institutional knowledge is still being transmitted to staff. I've got my finger on the pulse of the business, but more as an observer. Step away, and that will change. I'm not retired or off starting a new business, which has different issues. Second, there is still the question of whether this new position is temporary or full time. It might be seasonal if I run out of meaningful projects. Perhaps it's a January through March break after each busy, holiday season. Third, is this could also be a trap of sorts, keeping me from starting a second store or other business. A safe place to explore a business that is self sufficient and really doesn't need the extra attention (I disagree with that).

This is the point where a customer might have concerns that the whole business, the service and selection, will completely fall apart. That's valid. However, I've been at the new job, kind of informally, since around October. The store is in very good shape at the moment.

Some store owners will say you should never do this. Burn down your office. Others will ask me what took so long. I think it's a decision as personal and unique as every store out there. What do you think?

Friday, February 6, 2015

Say you have a game product and you don't want to deal with the game distribution system for whatever reasons. How do you sell to retailers? What do they want? What should you avoid? Here's what I'm looking for. I encourage other retailers to add their comments:

Alpha Stores. On one extreme, game stores can exist entirely with one distributor and 100% of their games coming from that single supplier. On the other extreme, mall stores that do a lot of mass market games to the general public may have as many as 100 suppliers. But most stores? Most stores have a couple other accounts besides distributors, such as a Wizards of the Coast account to get Magic promos and product and perhaps a Games Workshop account. Adding more accounts adds complications and cost and they generally dismiss the idea out of hand.

If you want to sell direct to game stores, you're selling to alpha stores. You are their luxury brand, as they've already covered all their bases with product from distribution. They're looking to "round out" their inventory, to add flavor. You are the spice to the meat they buy from their other sources. There are probably 3,000 game stores and about 10% are alpha stores, so your market is around 300 stores.

Simplicity. Those 300 store owners spend no more than 10% of their time purchasing. They need quick, streamlined processes that don't require remembering complicated information. I've got a supplier that will sell me boxes of CCGs, but at six boxes I get a discount, then a different discount at 12 boxes. And then.... snore. I call him when I need things and their prices are good. That's what I remember. He also calls me on the phone using high pressure sales tactics and he knows I screen him with caller ID.

Simplicity also means I can quickly generate a purchase order and send it off or I can go to your website and order direct, hassle free. If I have to call you, you know, on the telephone, it's an interrupt I will avoid. That includes the weekly or monthly phone calls I take from so many secondary and tertiary suppliers. I'm busy and it's an irritation. Send an email. Remember, it's only 10% of my job, while it might be 90% of yours. A simple order placement system means I can do restocks like clockwork and regular restocks are how you and I make the money.

Also, if you've got PDF products free with print products, please go with an established system, like Bits & Mortar. I've got half a dozen people on staff who need to know the procedure for this, and multiple procedures is not going to work. One procedure barely works.

Seeing Other People. You will probably also be selling direct to customers. I'm not going to stand in your way. Multi channel sales is the way of things. However, if you're selling to them at a discount, I'm probably not going to deal with you unless you've somehow approached "first tier" in my mind, like a Paizo or a Games Workshop. If I do carry you, it's unlikely I'll promote you like I should, because I know you're under cutting me. Every moment I spend selling your game is a moment I'm spending on marketing so you can later "steal" the sale. I'll cut bait and run much sooner than with those who aren't doing this.

This also goes for special offers to customers that aren't offered to retailers. If you're offering anything other than junk clearance (which you should also offer me, to keep me happy), I'm going to be frowning. This includes Kickstarter projects as well. As much as I hate ordering a game and having it arrive with a bookmark, promo card and stuffed chihuahua that once meant something to you and your backers, at least I know you cared enough to include me in the scheme. An entire series of blog posts could be written on the Kickstarter-Retailer relationship.

Push. If you really want us to sell your game, suggest customers buy the game from us. Do you know where Games Workshop fails and every good direct company succeeds? They get customers to ask me for the upcoming release. Push your customers to pester existing game stores to have the new thing on release. Even better, push them to special order that item. Please don't push them to ask every game store, just your retailer partners. There's nothing worse than a campaign to pester me for a line I don't carry. It makes me dig in my heels and resist.

Include a retail locater on your website. Make sure you contact those people once a year. Fun fact: Most game stores don't track what retail locaters they're on, so over time, that information becomes stale, making the publisher and the retailer look foolish. Retailers should track this, but so should you.

Margin. At a 50% margin and free shipping, we're good all day long. That's what we get from most distributors on most products. You should be able to afford this without the distributor involved. At 45% and free shipping, you're now a brand sold at a premium. I'll carry your line, but it better move and brands at 50% get top billing. At 40% and free shipping, your brand sells itself. When it stops doing this, it's gone. At 35% and free shipping, there should be no risk, amazing turns, and you're in my top five in the store. You are the Cards Against Humanity of your tier. If any of this sounds terrible, consider distribution.

I want to pay with a credit card (edit: PayPal is fine, with no fees). I want quick turn arounds with order confirmations and tracking. I want out of stock tracking and notifications when items are back. I want paper invoices sent with the order. I want emails of upcoming items in a timely fashion and the ability to pre-order them, not just a phone call when they're in.

If you want an example of a company that nailed direct sales from day one, check out Wild West Exodus. We're really not selling their game any more, but they were breathtaking in their professionalism. I give them massive credit for that. The absolute worst is Games Workshop, of course, who seems intent on making my life hard and my customers buy direct from them.

Monday, February 2, 2015

Book stores going out of business is nothing new. Borders is gone and Barnes & Noble plan to close hundreds of stores in the coming years. B&N has gotten into the game trade recently, selling the heck out of our mainstays. The story of Borderlands in San Francisco closing is a little different. It's a fantasy, sci-fi and horror bookstore that has been around for 18 years.

The issue stated for closing at Borderlands is the steep San Francisco rise in the minimum wage, which jumps to $15/hour over the next three years, rising in pretty steep increments over that time. If you read the Borderlands press release, they have very clearly broken down their labor costs, how it effects their overall operating costs, and the amount of sales they would need to cover those costs. Not only do they believe they couldn't survive with those numbers, they believe no book store in San Francisco could survive. Only a week earlier, Valhalla Books in San Francisco also announced they were closing.

There are two issues here, minimum wage and as Borderlands points out, the stifling effect of the MSRP, manufacturers suggested retail price. Both of these issues effect game stores, since we're usually close to the minimum wage level with most employees, and most of our games (for us 80%) have an MSRP. Lets look at a higher minimum wage first. I support the idea. I support the rising tides theory that many of our customers would have more disposable income with a minimum wage that would go to us.

The problem with minimum wage is when it rises too fast. When it rises above a reasonable level of annual profit of a small business, you've got trouble. Using Borderlands numbers, a 20% rise over 3 years would require a nearly 7% increase in sales. Most retail businesses are not growing at 7% a year. I don't need back of the napkin math to figure this out. The Department of Commerce numbers show average retail sales growth median to be 5.04%, with 2014 at 3.17%. So minimum wage yes, but not so quickly.

Also, enacting a fast track minimum wage while criticizing small businesses for their ethics when citing it as a reason for their failure, which is what happened in local new sources, is the liberal version of blaming poor people for being lazy. The system is rigged folks. It's rigged at both ends. Have a little more compassion. When you enact draconian government policies on all businesses, regardless of size, you no longer get to criticize large corporations as a liberal. You are giving them a pass with a regressive policy and inviting them to take over. I'm kind of liberal, and the hypocrisy stuns me. Now lets look at the real culprit, MSRP.

The telling point of the Borderlands post was the discussion of MSRP. As I've said many times, an MSRP is a price ceiling that prevents businesses from adjusting to different business models and conditions. If I want a boutique store in a fancy area, I need to charge over MSRP. That's essentially a Borderlands in San Francisco. The market will determine "the price" without the need of it printed on the book jacket. The book trade is pretty well established with MSRP, but the game trade is a little more flexible.

The concept of MSRP is bad. You can never charge more for an item, you are only being undercut by MSRP. Plenty of other industries prosper with a net price model, the closest to us being the toy industry. You can take a random net priced toy and find a 20% price differential among a variety of stores online, within minutes. Each has their own marketing, cost structure and justification for their price. Each sells a number of these toys at the price that works for them at the amount they desire. The game trade has some net pricing, but not nearly enough. I want to encourage net pricing to continue so game stores have the freedom to address rising costs and explore different models. The freedom to increase prices to cover costs is a fundamental part of retail that is still alien to many in the game trade.